Friday, May 25, 2012

Cross-faction: It's not just for flipping

So, it's been a difficult couple of days on my server. Mat prices have taken a dramatic leap upward, and if I had to take a wild guess, I'd imagine it has a lot to do with Diablo 3. My stock of gems was running low, so I went looking for some more. Pyrite was literally gone (a bummer for my blacksmithing as well), and elementium and obsidium had a few stacks up at around 90 gold per stack.

Now, 90 gold stack isn't horrible, and I could probably still make a profit. But my server had spoiled me recently, with large sums of ore being posted at 40-50 gold a stack. At that price, considering cut inferno rubies were sticking around 150+ and Heartblossom was usually less than 100 per stack, I was making a profit even if all I sold was the inferno rubies.

Then I had a thought. My theory was that these price problems were due to a dip in the effective population, either because of D3 or something else. But the Alliance side on my server has a much higher population than the Horde side, so I wondered to myself, were they having this problem?

Imagine my surprise when I check the Alliance side, and there are stacks of elementium ore going for 24 gold. That was great, but I'd never really done much with cross-faction before except for the pets, and I'd only been doing that for a little bit. My Alliance alt wasn't exactly swimming in capital to buy this ore.

Now, I know there are people who do a lot of cross-faction business, and therefore have a sizable amount of gold on both sides. If this is you, congratulations. You can cut a bit of work out of the process and essentially sell them to yourself on the neutral AH for free, knowing that you'll return the favor eventually.

For those of us who are less fortunate, there's a bit of math involved. First of all, you can't afford to have your cross-faction alt's gold supply go down at all, so at the very least, you'll want to determine the amount where you're getting back what you spent to grab the item. We'll call this your break-even point. The neutral AH takes a 15 percent cut, so you'll want to take the price you originally paid and divide it by 0.85 (In our example, this comes out to roughly 28g,23s,53c per stack) .

Once you have your break-even, you have a decision to make. Are you happy with the amount of gold on your alt? Did you have enough liquid gold to pick all of these mats up in one go, or did you have to wait for the money to come in from yourself to buy more? If you want to give a little bump to your cross-faction alt's gold supply, consider slightly upping the price you charge yourself. In this case, for example, my Alliance alt put the ore on the neutral AH for 40g a stack. I know I can still easily make profit at that price, and that alt has a bit more liquid gold for the next time I'm in that situation. Another bonus to this approach is that if a neutral AH sniper snaps it up, at least I'm still making a little bit of profit out of it.

So, next time you're doing your mat shopping and something's jumped up to the point of ruining your profit, don't just roll over and say "I guess I won't be crafting that today". Take a look at the opposing faction's AH and see what you find there. It won't always save you money, but you might surprised how often it can.